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Each January, Fundata recognizes top-performing funds at its annual FundGrade A+ Awards celebration. The awards are based on FundGrade ratings throughout the previous calendar year. The FundGrade ratings are calculated monthly using up to 10 years of risk adjusted performance. Funds are ranked within standard categories developed by the Canadian Investment Funds Standards Committee (CIFSC) and are assigned letter grades of A through E, with the top 10% of funds receiving an A Grade each month.
In 2013, Fundata began recognizing responsible investment (RI) funds using the same methodology. Every year, A+ Awards are given to three RI funds in three different categories: equity, fixed income, and balanced. To be eligible, funds must have been identified as RI funds by the new CIFSC RI Identification Framework that was released earlier this year. Let’s take a look at the 2022 Fundata RI FundGrade A+ Award winners.
In the equity category, the 2022 RI A+ Award winner was Mackenzie Greenchip Global Environmental All Cap Fund. The fund debuted in 2018 and is in the Global Small/Mid Cap Equity category. It is managed by the Mackenzie Greenwich Team, which has been dedicated to environmental investing since 2007.
The fund invests primarily in companies selling “environmentally superior products and services”. The main sectors of focus include Clean Energy, Energy Efficiency, Clean Technology, Water, Sustainable Agriculture and Transportation.
Last year was generally a rough year for equity investors. The S&P/TSX Composite Index lost almost 9% while the S&P 500 Composite Index was down 19%. Global indexes and Emerging Markets were also down double digits. Mackenzie Greenchip Global Environmental All Cap Fund, however, dropped only 5%, handily beating the category average loss of over 15%. Over the past four years, the average annual compounded rate of return to Feb. 28 is an impressive 18.1%, putting it in the top 10% of funds in the category. The concentrated portfolio consists of around 40 securities. U.S. exposure sits at 19% with France the next highest at 14%. Canadian exposure is 7.3%. The MER for the A series is 2.56%.
The RI A+ Award winner in the fixed-income category was BMO Sustainable Global Multi-Sector Bond Fund, a Global Fixed Income fund that BMO introduced in 2018. The fund invests in a diversified portfolio of government and corporate fixed-income securities while employing a responsible investing approach to evaluate the responsible impact of companies. It looks at a variety of environmental, social and governance factors including carbon footprint, climate change, impacts on public health, human rights, and board structure and oversight.
Like most fixed income funds, rapidly rising interest rates over the past year hurt performance. In 2022, BMO Sustainable Global Multi-Sector Bond Fund lost 10.1%; however, this was still better than the Global Fixed Income average loss of 10.7%. In the first two months of 2023, the fund is up 1.34%. The A series of this fund has an MER of 1.2%. It pays a quarterly distribution and has a trailing 12-month yield of 3.6%.
Finally, in the Balanced category, the 2022 RI A+ Award winner was FMOQ Omniresponsable Fund. This fund debuted in 2016 and is in the Global Equity Balanced category. The fund is managed by Fiera Capital and has an asset allocation target of 60% equity and 40% fixed income.
ESG issues are integrated into the investment decision-making process for both the equity and fixed-income holdings. The mandate also specifies ESG exclusions. Companies are not eligible for investment if they derive more than 10% of revenues from certain products, including weapons, alcohol, military contracts, gambling, tobacco, and nuclear energy.
In 2022, FMOQ Omniresponsable Fund lost 9.2% compared with the category average loss of 11.9%. Over the past five years to the end of February, the fund posted a 5.1% average annual compounded rate of return. The MER is 1.09%.
Responsible investing continues to gain traction, and new products are being launched across all asset classes. As with any investment fund, it is important to consider a manager’s track record when it comes to generating alpha while at the same time employing various responsible investing approaches. The Fundata RI A+ Awards recognize top funds for their risk-adjusted performance while ensuring they adhere to the industry standards for responsible investing.
Brian Bridger, CFA, FRM, is Senior Vice President, Analytics & Data, at Fundata Canada Inc. and is a member of the Canadian Investment Funds Standards Committee.
Notes and Disclaimers
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Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated. The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.
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